Grafton Group plc, the international building materials distributor and DIY retailer, has issued its trading update for the period from Q1 2023 ahead of its Annual General Meeting today.
The Group’s overall performance in the first quarter of the financial year was in line with expectations, with Group revenue in the period to 23 April 2023 at £704.3 million, up 2.8% from the prior year.
March trading was a little softer than anticipated with sales of seasonal products in Ireland and the UK adversely affected by wet weather conditions.
Volumes were lower than in the same period last year in the Group’s distribution markets in the UK, Ireland and Finland and were ahead in the Netherlands. Timber and steel price deflation contributed to a moderation in the rate of building materials inflation in its Irish and UK distribution businesses. Lower demand for plants and gardening products contributed to a small decline in revenue in the retailing business in Ireland. Strong revenue growth in the UK manufacturing business was driven by volume gains and the recovery of increased input costs.
The Company will remain alert to macroeconomic headwinds impacting markets but are maintaining operating profit expectations at this stage.
Eric Born, Chief Executive Officer of Grafton Group plc said, “Our resilient Q1 performance reflects the strength of Grafton’s diversified businesses and proximity to customers through its federated structure. The experienced management teams across the Group’s portfolio of high-quality businesses have the capability to respond effectively to any changes in trading patterns that may emerge as the year develops.”
Revenue declined in Selco in a more challenging macroeconomic environment as households cut back on discretionary spending including non-essential RMI projects. The rate of building materials price inflation moderated to 5.5% in the first quarter. A new Selco store was opened in Peterborough in April bringing the estate to 75. Leyland SDM delivered a strong performance building on the progress made in the second half of 2022. A new Leyland SDM store was opened in Hammersmith in February and a new store in Crystal Palace is scheduled to open later this year. Revenue declined in the MacBlair distribution business in Northern Ireland against the backdrop of a weaker economic environment and lower activity in the new housing and RMI markets.
Chadwicks operated at high levels of activity in a market that continued to be supported by strong demand fundamentals. New build activity was more resilient in the scheme housing and commercial construction markets with a softening of demand experienced for materials supplied for the construction of single homes and RMI projects.
Isero performed strongly despite the decline in existing housing transactions and slowdown in new home construction. Collected branch revenue increased as customers transferred from new build to repair and maintenance projects. Revenue from key account customers engaged on large commercial construction projects was also higher.
Revenue was flat in IKH as growth in the Finnish economy stalled and house building started to slow in response to weaker demand.
Revenue was marginally lower in the Woodie’s DIY, Home and Garden business in Ireland reflecting a positive start to the year and lower demand for seasonal categories in March.
Double digit revenue growth in CPI Mortars was driven by the recovery of input cost increases. Demand was resilient for dry mortars supplied to the new housing market and volumes held up well while demand was somewhat weaker for packaged ready-to-use products supplied to the residential RMI market. StairBox continued to outperform and increased the volume of bespoke staircases supplied to the secondary housing market.